# Amazon boss Jeff Bezos amass a £40billion fortune



## GURPS

The tax-avoiding 'Bond villain' who's trying to take over the world: His insatiable lust for money has seen Amazon boss Jeff Bezos amass a £40billion fortune. But he wants more - MUCH more 


    Jeff Bezos has amassed a £40billion fortune as boss of retailer Amazon
    The 51-year-old is expanding company into new horizons
    He has said he wants firm to win an Oscar with its film division
    Bezos is regarded to be the fourth richest man in the world 
    See the latest Amazon news updates at www.dailymail.co.uk/amazon 



Read more: http://www.dailymail.co.uk/news/art...billion-fortune-wants-more.html#ixzz3wHQQinD8
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## Hodr

Well he definitely fought to get there.  Went head to head with industry giants (or does no one remember how dominant barnes&noble was in the 90s), lost tons of money for over a decade, and still managed to build an empire.

People might draw parallels to Walmart, saying Amazon was willing to lose money to build market share (and they would be right), but unlike a brick and mortar store that drives away competition then raises the price, an online retailer can't do the same thing.

Amazon had to find a way to keep the customers while (finally) becoming profitable, which means they had to continue to provide the best service possible.

There is no excuse for being an uninformed shopper online.  It only takes seconds to compare products against dozens of retailers (including physical stores), so the very day that Amazon decides to begin abusing their customer base to maximize profits, they will find people moving away in droves.

And Jeff was the head of Amazon from the very beginning. It wouldn't have existed or become as large as it has without him, so he deserves to enjoy the benefits.  Unlike a CEO that is brought into an already well established company, spends years driving the stock into the toilet, then jets into the sunset with millions of dollars severance just to be immediately placed at the helm of another successful company.


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## tommyjo

Hodr said:


> Well he definitely fought to get there.  Went head to head with industry giants (or does no one remember how dominant barnes&noble was in the 90s), lost tons of money for over a decade, and still managed to build an empire.
> 
> People might draw parallels to Walmart, saying Amazon was willing to lose money to build market share (and they would be right), but unlike a brick and mortar store that drives away competition then raises the price, an online retailer can't do the same thing.
> 
> Amazon had to find a way to keep the customers while (finally) becoming profitable, which means they had to continue to provide the best service possible.
> 
> There is no excuse for being an uninformed shopper online.  It only takes seconds to compare products against dozens of retailers (including physical stores), so the very day that Amazon decides to begin abusing their customer base to maximize profits, they will find people moving away in droves.
> 
> And Jeff was the head of Amazon from the very beginning. It wouldn't have existed or become as large as it has without him, so he deserves to enjoy the benefits.  Unlike a CEO that is brought into an already well established company, spends years driving the stock into the toilet, then jets into the sunset with millions of dollars severance just to be immediately placed at the helm of another successful company.



Amazon is profitable? The profit margin is 0.33%. Amazon as a company is horrid. The company makes no money. It only survives on volume.  

While Mr. Bezos certainly is enjoying the fruits of his labor, his company has done far more damage to the US economy. How many stores have closed? How many people have lost jobs in the retail sector....how many of your neighbors?

Its interesting all those who claim that "free" isn't free...never seem to be able to equate how costly "cheap" can be!


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## Hodr

tommyjo said:


> While Mr. Bezos certainly is enjoying the fruits of his labor, his company has done far more damage to the US economy. How many stores have closed? How many people have lost jobs in the retail sector....how many of your neighbors?



Damage to the economy? Not too much I would gather.  How much different is 10 stores selling 1 widget vs 1 store selling 10 widgets to the widget manufacturer?  Heck they might even save money on distribution.  And for every retail salesperson job lost, do we gain a job in an online retailers warehouse? Maybe not 1 for 1, but there are a million other variables that add or detract from the job numbers.  Could my local computer shop stock computers from 30 different manufacturer's, or would they be limited by shelf space to a select few. Would my local shop have the expertise to recommend the perfect device/food/cleaner/etc. from the 100s of options, or would they recommend the one that they happen to stock (because the distributer was local/cheap).  Can my local retailer provide hundreds or even thousands of reviews of each of their products allowing me to compare and contract and find the best value? Does the access to these smaller companies products promote more job growth?

If you want to argue that online companies hurt local businesses, there may be some merit to that, but I feel that's a separate topic.  What Amazon has done, consolidating a good chunk of online purchasing to one retailer doesn't in itself increase or diminish that hurt.  And if a store half way across the country can ship a product to me cheaper than one in my own town could deliver it, then that's a failure of the local business to adapt to the way people prefer to shop.

And believe me, I would take 0.33% profit on their volume any day of the week.


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## GURPS

I buy most of my stuff from amazon .... even Spark Plugs 


I never have to leave my house ....


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## Hodr

GURPS said:


> I buy most of my stuff from amazon .... even Spark Plugs
> 
> I never have to leave my house ....



And the thing Tommyjo may be overlooking is that a good percent of the goods offered on Amazon are through their marketplace (meaning its 3rd parties just using Amazon to process the transaction).  Tons of mom and pop stores sell through the marketplace.

There's just one step left I think.  If AutoZone was the company that sold you those spark plugs through Amazon, there should be an option for local pickup or immediate delivery from their store.


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## GURPS

Hodr said:


> There's just one step left I think.  If AutoZone was the company that sold you those spark plugs through Amazon, there should be an option for local pickup or immediate delivery from their store.







that might be nice, I'd just use Autozone or Advance portal


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## PsyOps

tommyjo said:


> While Mr. Bezos certainly is enjoying the fruits of his labor, his company has done far more damage to the US economy. How many stores have closed? How many people have lost jobs in the retail sector....how many of your neighbors?



Rather than just saying so, please outline the damage.  Make sure you provide sources.

:likethat'sgoingtohappen:


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## Warron

I buy a lot through amazon as well.  It comes down to setting in traffic for hours driving from store to store with no guarantee they even have what I want, or spending 5 minutes on a computer.  

I would love to buy more from brick and mortar stores, but whatever method many use to determine what they stock, it does not align with my needs or wants. Groceries are about all I go to stores for anymore.


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## This_person

A rich guy, driven and financially successful, wants more.

What's the conspiracy?


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## b23hqb

You go, Bezos boy. It's your money, and you do what you want with it. More power to you, and do your best to make as much as you want.


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## Tilted

Amazon makes for an interesting business model (and business arc) case study. Yes, Mr. Bezos is incredibly wealthy (on paper, as some would say). But even today - 20 years in for Amazon - most of that wealth (i.e. the market value of the AMZN stock he holds) is still based on the expectation that someday he (or someone) will be able to leverage Amazon's market positions such that it will be able to make a lot of money. Up until now the company has, for the most part, been focusing its efforts and resources on establishing a presence in a bunch of different markets and a dominant position in certain markets. And, again, this is 20 years in.

Broad strokes: Amazon lost something like $3 billion in its first 8 years. Then it reached profitability and over the next 9 years made about $5 billion. That brings us through 2011. Since then it hasn't made money. (To be clear, it made a little money in 2013, but less than it lost in 2012 and 2014 such that it actually lost a tiny bit of money over that three year period. Also, there are a lot of pieces to the net income puzzle with a company like this, what I'm referring to is Amazon's reported GAAP income based on standard accounting methods. If you choose to include or not include certain things (e.g. stock-based employee compensation), you can get different results.)

It's again largely using its resources and focusing its efforts on establishing market positions. In some contexts it essentially gives stuff away - perhaps even at loses - in order to establish certain aspects of its businesses, increase marketshare, or garner mindshare. It is, presumably (at least in the hopes of shareholders), setting itself up to be dominant (or in some areas maybe just relevant) in the future so that it can make big money. As one example, for a long time it tried to establish both monopolistic and monopsonistic power in book sales. It did things not so much to make money (right then) but to make itself the only meaningful player when it came to both selling books to consumers and buying books from publishers (or otherwise from content creators). To some extent it was successful on that front, but perhaps not to the extent it hoped to be. Once it gets in such a position of power it has a lot of options as to how it can use that power to generate strong earnings.

Amazon reports fourth quarter (and full year) earnings this afternoon. If it reports more or less what it's expected to, it will have returned to making money for 2015 - something like $900 million for the year. That's nothing to sneeze at, but it's a comparably small amount for a company with its market cap and for a business that is as dominant as it is in some areas (and that has a presence in so many other areas).

Those earnings for 2015 would mean that it's made something like $3 billion over its 20 years of existence (that's accounting for the money it lost in a lot of those years). Again, that's nothing to sneeze at. But compare it to a company like Facebook which made more than that ($3.7 billion) in just this past year. It reached profitability pretty early on and in less than 10 years has made something like $9 billion. (Again, we're talking about GAAP earnings, Non-GAAP earnings would be quite different - more like $6.5 billion in just this past year.) It's already delivering on its (unspoken) promise to someday start making a lot of money.

Amazon may well deliver on that promise too, it may even do so soon. But it hasn't really done so yet. Heretofore it's just been setting itself up to rule the world. It's done fairly well on that front. And as we all can likely imagine, if you rule the world it shouldn't be that difficult to figure out a way to make a few tens or hundreds of billions of dollars. 

At any rate... Good on Mr. Bezos, I wish him (more) success. And for his shareholders' sake I hope Amazon starts making considerably more money sometime soon. The promise of future bonanzas can only hold a stocks' price at such lofty levels for so long. I think.


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## Hodr

Amazon has always, and probably will for the foreseeable future pump the majority of its earnings into expanding into new markets.  If tomorrow everyone stopped using the Facebook website, and presuming they wouldn't be allowed to sell all of the information they have gathered on their users, they would have very little in the way of assets or profitable subsidiaries.  Amazon has warehouses, distribution networks, they own robotics companies, TV/cinema production houses, they publish books/ebooks/music. Amazon has a software patent portfolio that would allow them to extract royalties from almost every modern ecommerce platform should they choose to litigate. Amazon could flip the switch at any time from expansion to maximizing profits and their net would be insane.


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## Tilted

Tilted said:


> ...
> 
> Amazon reports fourth quarter (and full year) earnings this afternoon. If it reports more or less what it's expected to, it will have returned to making money for 2015 - something like $900 million for the year. That's nothing to sneeze at, but it's a comparably small amount for a company with its market cap and for a business that is as dominant as it is in some areas (and that has a presence in so many other areas).
> 
> ...



To follow up...

Amazon reported earnings far below expectations yesterday, so it made more like $600 million (again, GAAP earning) in 2015.

So much of the profitability they've been realizing lately (to the extent they realize it at all) has been driven by their Web Services business, a non-consumer facing aspect of what they do. It's a significant part of Amazon's ability to fund ongoing investment in other markets, trying to establish its presence in them.


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## Gilligan

What's really interesting (to me, anyway) is Amazon's creeping, almost clandestine, development of their own, and owned, delivery capacity. Planes...trucks...distribution centers....  Look out Fed Ex, DHL and UPS. At least when it comes to delivering Amazon sales, the big boys might get pushed aside.


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## GURPS

Tilted said:


> To follow up...
> 
> Amazon reported earnings far below expectations yesterday, so it made more like $600 million (again, GAAP earning) in 2015.





but Amazon is doing 'ok' 

they have debt, they have money coming in, employes get paid, rent gets paid ... the lights are still on


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## Tilted

Gilligan said:


> What's really interesting (to me, anyway) is Amazon's creeping, almost clandestine, development of their own, and owned, delivery capacity. Planes...trucks...distribution centers....  Look out Fed Ex, DHL and UPS. At least when it comes to delivering Amazon sales, the big boys might get pushed aside.



That's certainly one of the many things Amazon has been trying to do, become its own deliver service of sorts. Shipping costs are one of Amazon's biggest expenses. For 2015 they rose to more than 11% of net sales (excluding AWS revenue) and Amazon is effectively subsidizing shipping to the tune of 5% of net sales. By that I mean that what they spent on shipping is greater than what they collected for shipping by that much, about $5 billion for 2015. And that's for a company that, on paper, made less than $1 billion during that period. If we exclude media sales, for which there really shouldn't be much in the way of shipping costs, their shipping costs amount to about 15% of their net sales. So, yeah, they're pretty interested in figuring out how to cut shipping costs in the long run and they're spending money today to bring that process more in-house.

Those reported shipping costs also don't include what they refer to as fulfillment costs, which were in excess of $13 billion last year and which include the operation of their own warehouses and service centers and such (as well as payment processing costs).


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## Tilted

GURPS said:


> but Amazon is doing 'ok'
> 
> they have debt, they have money coming in, employes get paid, rent gets paid ... the lights are still on



Certainly they're doing okay. They have the ability at this point to make money if they want to, though as things are they really only make money because of their Web Services segment.

Much of my point was that they aren't focusing on making money now, they're focusing on taking over the world so that someday - ostensibly, at least in keeping with their stock valuation and apparent investor confidence - they'll be able to put the squeeze on someone and make lots of money. We should keep in mind that the major systemic advantage that they had in the early stages of the company which helped them grown their original primary business (retail) - not having to collect sales and use tax as much of their competition did - is disappearing and likely will continue to disappear. In a business where effective net margins end up being pretty small, that 5 or 7 percent makes for a huge pricing advantage.


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## Tilted

Hodr said:


> Maybe that was a pricing advantage, but I wouldn't credit the lack of sales tax as the primary growth enabler.  Heck, when they first started they only sold cheap items like books (remember that?) that would have had negligible taxes.
> 
> I think they were always ahead of the technology curve (well designed well working web page, one click ordering, etc.), they were one of the first etailers to offer free shipping (originally free for all, then free for orders over $25, then $35, then Prime....)
> 
> There were other large online stores at the time that also did not collect sales tax, and Amazon quickly surpassed them all.
> 
> Like you mentioned, shipping is their biggest hurdle.  They have been trying to mitigate it through add-on items (not free to ship even if you have Prime, unless you order $25+), Prime Pantry and Subscribe & Save (encouraging people to consolidate bulky items into single shipment).
> 
> They have their own local delivery services in large cities as well as collection boxes (I used one in NYC and had my package less than 2 hours after purchasing) and they have their own contracted drivers for USPS (separate delivery routes, and Sunday delivery).
> 
> They are spending money on drones and autonomous vehicles to further streamline.  I would bet they don't lose too much money on deliveries within major metro areas already.  It's those of us that live 200 miles from a distribution center that force them to use UPS or USPS (especially) that likely are the big money sinks.
> 
> It's a puzzle, but I know they will eventually sink enough money into it to solve the issue.  I don't think the answer is UAVs (unless you happen to live in NY, have access to a rooftop, and only order small stuff), but maybe in the not-too-distant future I will get text/email updates (accurate to with a couple of minutes) of when to expect my package, and then a midsize truck rolls down my street, lowers a ramp, and down comes a newer version of their warehouse KIVA drones which carries the box up to my doorstep and drops it off.



Yes, you're right, the sales tax issue is not the only thing that drove Amazon's success. There are plenty of reasons for Amazon getting where it is today. But that pricing advantage was a significant piece of the puzzle.

That said, they're likely getting better and better at dealing with the shipping costs issue. I wouldn't say they'll solve it, I'm not sure it's something that has to be solved. As has been said, they're doing fine as things are. I think, bigger picture, what happens is that shipping concerns become less significant as what they do more and more becomes things for which shipping isn't relevant. Thats what they're trying to do - become something other than primarily a retailer for physical goods. Being an online retailer of goods was the early stage of the company, it's what's got them into the big leagues - where they had consumer connections and lots of resources to be able to develop other businesses. Ten years from now shipping costs won't represent as big a piece of Amazon's revenue, but not only because they will have gotten more efficient. It will also be because shipping physical goods (and even selling them) is a smaller part of what they do.

Take Amazon Prime for instance. A big piece of the shipping costs associated with that service is effectively marketing cost. It helps create more physical sales as well as help get people into the Amazon media ecosystem. For now they'll take the shipping loses to help create a market presence when it comes to digital content consumption.


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## GURPS

Tilted said:


> For now they'll take the shipping loses to help create a market presence when it comes to digital content consumption.





Man in a High Castle was great ....


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